This group has continued its study of sequence-specific DNA-binding proteins in Drosophila, with focus on transcription factors regulating heat shock genes and the segmentation gene fushi tarazu, ftz. The transcriptional activator of Drosophila heat shock genes (Heat Shock Factor, HSF) has been cloned. The HSF clone has been expressed in E. coli, and the properties of the recombinant HSF protein are being studied. Whereas the natural HSF protein in the cell exists in an inactive form that is incapable of binding to DNA, the recombinant protein was found to be active for binding DNA and activating transcription of heat shock genes in vitro. These results suggest that the HSF protein is subject to negative regulation within the cell. The availability of recombinant HSF now makes it feasible to design screens for the inhibitory factor (IF). Studies of the interaction between HSF and IF should elucidate the mechanism by which the inactive form of HSF behaves as a sensor of cellular stress. Two transcriptional regulators of the segmentation gene ftz, identified by biochemical screens, have been cloned and sequenced. FTZ-F1, an activator of the ftz gene, is a new member of the steroid hormone receptor superfamily. FTZ-F2 is a repressor of the ftz gene and a new zinc-finger protein. Both FTZ-F1 and FTZ-F2 genes were missed by genetic screens for embryonic lethals with a segmentation phenotype, underscoring the need for biochemical screens to complement genetic studies.